Chapter Four: Controls for Conducting Underwriting Activity

First: Controls for Conducting Underwriting Activity

When studying the application of a bank seeking approval to conduct underwriting activity in financial instruments, the following shall be considered:

1. The bank must have a capital adequacy ratio and liquidity coverage ratio approved by the Board of Directors of the bank, along with the limits for the deployment of its funds in the single unit, provided that the bank does not have a capital adequacy ratio and liquidity coverage ratio approved by the Board of Directors of the bank, and the limits of compliance in the financial markets.

2. The bank must not have been subject to any sanctions imposed by the Central Bank of Egypt regarding liquidity and solvency.

3. The bank must conduct a liquidity study.

In addition, approval is granted to banks that have obtained the financial license from the Financial Regulatory Authority to conduct underwriting activity in financial instruments, considering the following:

1. Submitting a comprehensive economic study of the company that will be underwritten, where the content of the study shall not be less than the capabilities of the underwriting bank, and the amount shall be the available amount from the underwriting bank, which does not result in exceeding the limits of Articles 51, 56/1, 60/3, 56/1, and 71, and the capital adequacy ratio of the bank and the approved banking capital and the capital issued by the Capital Market Authority No. 88 for the year 2003, as well as the decisions of the Governor of the Central Bank of Egypt (Implementation/56/1) referred to in the fifth paragraph of Article 1 of the Law No. 88 issued on 27 July 2004 regarding the definition of capital and the capital market. No bank may participate in the underwriting activity for the limits of the Capital Market Authority.

2. Submitting a decision to the Central Bank of Egypt to maintain the limits mentioned in the articles and the decisions of the Governor of the Central Bank of Egypt referred to, and the capital for each case at one limit.

3. The Central Bank of Egypt must be notified of the underwriting activity and the amount allocated to the bank as the underwriting amount, and the amount shall be deposited in a separate account in the financial market (a financial market account for specific purposes).

The total amount of the underwriting activity allocated to the bank shall not exceed the limits of the approved banks and in light of the requirements of the Central Bank of Egypt regarding the ratios, capital adequacy, and liquidity.

Second: Underwriting Operations on Behalf of Certain Entities

Banks operating under this chapter must obtain prior approval from the Central Bank of Egypt for each case, and the following conditions must be met to conduct underwriting on behalf of other entities:

1. The bank must not have been subject to any sanctions imposed by the Central Bank of Egypt regarding the underwriting activity for a period of one year preceding the date of the application.

2. The closed company must not be included in the underwriting activity.

3. Letter of Mr. / Governor of the Central Bank of Egypt issued on 24 September 2014.

4. Letter of Mr. / Governor of the Central Bank of Egypt issued on 19 November 2014.